The public health emergency and economic slump precipitated by the Covid-19 pandemic has prompted the authorities to amend various rules and regulations applicable to the fund industry in Luxembourg.
We have summarised below the most important developments.
Prohibition on holding physical meetings
In the current circumstances, with the circulation of people drastically restricted in the European Union and worldwide, the holding of both meetings of management boards and boards of directors of a company and of general meetings of shareholders has been significantly affected.
On 20 March, the Luxembourg government issued a grand-ducal decree offering practical solutions to the difficulty in conducting meetings on the part of companies and other legal entities. Other shareholders' rights, including the right to information and convening formalities, remain applicable. The decree applies equally to regulated funds.
Impact on shareholders
Regarding general meetings of shareholders, Article 1(1) of the decree states that, irrespective of any contrary provision in a company's articles of association, or of the number of participants present or represented, a company is entitled to hold any general meeting of shareholders without conducting a physical meeting, and summon shareholders to attend meetings.
They may exercise their rights via remote voting, either in writing or in electronic form, provided that the full text of resolutions or decisions to be taken has been published or communicated to them. Alternatively, they may exercise voting rights through a proxy appointed by the company, such as a lawyer, auditor, notary or board member, or by videoconference or any other telecommunications channel allowing the identification of each participant.
Shareholders who participate by these means are deemed to be present for the calculation of the quorum and majority at the meeting.
Should it be necessary to hold an extraordinary general meeting in front of a notary, please note that this is still feasible despite the exceptional circumstances. We can assist you should you need to organise a meeting urgently.
Impact on governance bodies
According to Article 1(2), irrespective of any contrary provision in a company's articles of association, other governance bodies may hold meetings without a physical presence through written circular resolutions, or by videoconference or any other telecommunications channel allowing the identification of each participant. Members who participate by these means are deemed to be present for the calculation of the quorum and majority.
Feel free to contact us if you need our assistance to organise such meetings and prepare relevant documentation to reflect the situation resulting from the Covid-19 pandemic.
Exception extension of annual accounts approval and filing
A fund's annual accounts should normally be approved by shareholders within six months of the end of the financial year. Under Article 1(3), irrespective of any contrary provision in a company's articles of association, the representative of a fund is exceptionally authorised to convene its annual general meeting at the latest on a date within six months after the end of its corporate year, or on a date up to 30 June 2020. This decision may be of relevance to your fund if it has a statutory fixed date for its AGM.
If you have already convened the annual general meeting, according to Article 1(4), you can still inform your shareholders of your intention to conduct the meeting in accordance with the provisions of Article 1(1) as above, provided you do so no later than three business days before the scheduled meeting.
The company's annual accounts should normally be deposited within one month of their approval with the Luxembourg register of commerce and companies. The Luxembourg Business Register announced on March 18 that companies will have an additional period of four months to file their annual accounts, at the standard administrative fee – that is, with no late filing penalty.
We encourage you to remain in contact with your fund administrator and auditor to check on a regular basis how you will be able to meet the deadline under article 1(3) of the decree. We are currently assisting clients with the approval of their annual accounts as smoothly as possible, from organising approval to deposit of the accounts with the Luxembourg Business Register. Please contact us should you need our assistance.
CSSF reporting deadlines
On March 23, the CSSF issued a statement informing supervised entities that while entities remain bound by the prescribed deadlines to carry out regulatory reporting, if entities can provide justification for a delay, the regulator will not enforce the rules strictly.
Two days later, the CSSF announced that if necessary the long-form report exceptionally may be submitted up to four months after the annual general meeting of the audited entity or fund, excluding delays to AGMs authorised by the government as part of its exceptional measures. The delays may not be applied cumulatively.
In the latest update of its frequently-asked questions on Covid-19, the CSSF has provided for further delays to fund reporting where necessary:
- Annual O 4.1./O 4.2 reporting (investment funds) under IML Circular 97/136 should be submitted to the CSSF within six months from the reference date for non-UCITS and within four months for UCITS. This deadline may be extended until 30 June 2020.
- Quarterly G 2.1 reporting (management companies subject to Chapter 16 and AIFMs) under CSSF Circular 15/633 should be submitted to the CSSF within 20 calendar days following the end of the preceding month. This deadline may be extended to 40 calendar days.
- Quarterly G 2.1 reporting (self-managed investment companies and alternative funds) under CSSF Circular 18/698 should be submitted to the CSSF within 20 calendar days following the end of the preceding month. This deadline may be extended to 40 calendar days.
- The management letter under CSSF Circular 02/81 should be submitted to the CSSF within six months from the reference date for non-UCITS and within four months for UCITS. An additional period of three months may be granted.
- Semi-annual UCITS risk reporting should be submitted within 45 calendar days following the reference date. The CSSF will inform firms of any postponement in due time.
- Quarterly value at risk and leverage reporting (UCITS) may be suspended until further notice.
- Early warning reporting on large redemptions (UCITS) may be suspended until further notice.
- Closing documents to be provided annually by investment fund managers under sub-points 3 to 15 of point 3 of Annex 2 to CSSF Circular 18/698 should be submitted within five months following the closing date of the manager's financial year. For managers that closed their financial year on December 31, 2019, the deadline may be extended until August 31, 2020.
- The deadline for investment fund managers whose financial year closed after December 31, 2019 may also be extended by three months.
- For the management letter to be submitted by investment fund managers within the month following the ordinary general meeting that approved the annual accounts and at the latest seven months after the closing date of the manager's financial year, an additional period of one month may be granted.
- The deadline for quarterly reporting of authorised AIFMs with the list of managed alternative investment funds is extended until June 30, 2020.
Communication with the CSSF must be conducted solely by e-mail and to the address firstname.lastname@example.org. Funds should liaise with their service providers on this.
The CSSF continues to encourage all entities to meet their regular deadlines if this is feasible. Please contact your auditor to assess the feasibility and timing of the audit of your fund.
We will continue to keep you posted regarding CSSF regulatory updates that may impact your fund.
The full text of these regulations or announcements is available as follows:
Grand-ducal decree: http://www.legilux.lu/eli/etat/leg/rgd/2020/03/20/a171/jo
Luxembourg Business Register: https://www.lbr.lu
Chevalier & Sciales
Office: + 352 26 25 90 30
Fax: +352 26 25 83 88
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.